Recent data published by the Bank of England reveals that household borrowing has reached record high as savings fall.
The money and credit report for November 2015 showed that consumers owed a total of £178.2bn on credit cards and loans in the run up to Christmas. The monthly increase was the largest since 2008 and compares with a rise of £1.2bn from September to October.
Retail sales rose by five per cent in November compared with the same month in 2014, according to the Office for National Statistics (ONS). The jump in consumer credit is said to follow signs of increased spending on the High Street.
At the same time the Office of National Statistics (ONS) unveiled that in the first quarter of 2015 households saved only 4.4 per cent of their income, the lowest in 50 years.
"This will fuel concern that consumers are borrowing more and saving less to finance their spending, which is likely a consequence of relatively high consumer confidence and extended low interest rates," said Howard Archer, the chief UK economist at IHS Global Insight in an article by the Daily Telegraph.
However, others disagree and see increased borrowing as a much needed boost to the economy.
"Credit flows are continuing to strengthen gradually, providing much-needed support to the economy as growth is hindered by slowing real income gains, the fiscal squeeze and the strong pound," said Samuel Tombs, chief UK economist at Pantheon Macroeconomics.